The oil bulls started the month with such high hopes "But it all come tumbling' down, Well it all comes tumbling' down yes it all comes tumbling' down whenever you're credit isn't sound. Austerity is a nice word and one the market wants to hear but doubts about whether or not that can happen. Not just in the European Union but in the EU as mind you but in the good old United States as well. Oh sure an austerity plan put through bye Portugal was welcome by the markets and seemed to calm the recent debt fears stormy seas yet at the same time moves in the commodities markets are showing that they fear another round of economic anguish. You see Austerity is great but for the Euro Zone it is like removing economic stimulus or even like raising interest rates. Higher taxes and less government spending will slow down the EU's growth and its demand for oil increasing the spectra of a deflationary down turn.

That's right deflation.  These fears are being clearly stated in the "decoupling" in the gold and oil market. As gold soared to record highs in dollar terms crude has sunk ever lower. Yes it is in part because the dollar looks to be a better bet than the Euro in the short run or the markets realization that perhaps the mystic of the Euro was a fantasy all along. Have you heard of any oil producers lately calling for oil to be priced in Euros? How about any super models wanting to be paid in Fiber? What is being stripped away in oil and other commodities is the extent that the price we see on the screen are artificially stimulated by a pile of economic puffery that when the true magnitude of debt is unmasked the amount of economic growth it will take to bay it back is staggering.  The inflation that we are seeing is being promoted willfully by central banks but as we continue to unmask the debt demons we see what the rally in gold now is really about.

The rally in gold is not just an inflation hedge but a hedge against a total global economic collapse. People are buying gold because they belive that global governments will dissolve and drown in heaps of mountainous debt that wills suck growth for decades and demand for commodities and everything else. Sure when governments print money that is indeed the definition of inflation but by trying to get us to worry about inflation is to try to not have us worry about the real problems. In other words inflation would be a nice problem to have.

As bearish as I am on oil we made a nice trade on the long side yesterday. Long Term I still feel that oil will break out on the downside yet for most traders I think that the swing sizes make it harder for them to ride this out. We have seen a precipitous drop from the false breakout to $87 a barrel on the upside that came on a light volume holiday week and oil should be targeted new lows for the year very shortly. Still for many to ride the short side and the ups and down may be impractical. For them it may be better to try to pick the high range and low range for the day.

In these market conditions it is imperative that you have a well defined plan. If you need help or need a range please call me for our numbers at 800-935-6487 or email me at pflynn@pfgbest.com.  I can provide you with levels on all of the major commodity markets.

Now I know it is Friday and business and trade junkies are bummed because they cannot get enough but there is no need to fear! Did you know that the Fox Business Network is broadcasting all weekend?? And what are more you can catch me there on the Air today!!! What better way to get geared up for the weekend!! Tine in! And if you don't get the Fox Business Network you are like so lame! So call you Cable Provider today!